Recharging non-allowable cost
I have a client who frequently recharges costs incurred back to his clients and at times this includes non-allowable items. For instance he may be asked to entertain a sales prospect.
If we show this as separate income and expense entries then the expense should be disallowed hence creating a tax charge on a neutral transaction. But I am concerned that netting off would not be correct.
Can anyone advise the proper treatment.
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